If your loved one is in the nursing home or assisted living facility and is on long-term care Medicaid in Florida (i.e., nursing home or assisted living Medicaid), you may know that the applicant is allowed to own a homestead property if the property is less than $595,000 in value (2020). If the Medicaid recipient is single, then all of his or her income, minus $130/month (the personal needs allowance), must go to the facility as part of the patient's responsibility. This means that the Medicaid recipient may own the homestead property but that her or she cannot keep their income to actually pay for the home. The family will have to pay for the home costs if they want to keep it.
But what if there is no family member that is able or willing to pay for the home's upkeep (i.e., taxes, insurance, utilities, maintenance), or the family does not want to maintain the home? This is a very common question that we can help you address.
If the elder/family have decided to sell the homestead property, the proceeds would take the applicant off of Medicaid, only if they keep the funds. Funds retained by the elder will become countable assets for Medicaid purposes, which will eventually take the elder off Medicaid. Importantly, if the homestead property is sold, Medicaid will not take the proceeds away, but the proceeds will take him or her off of Medicaid unless the family acts quickly. This means that with an elder law attorney's assistance, the sales proceeds can be protected.
Once the home is sold and the proceeds come in, the Medicaid recipient must disclose the sale to Medicaid within 10 days as a change of circumstances. In order to keep Medicaid, the sales proceeds must be legally spent or protected by the end of the following month. At or before the sale of the home, this is when you will want to start your work with an elder law attorney. There are plenty of options in protecting the sales proceeds, such as:
- Medicaid spend down planning
- Personal Services Contract (legal way to pay family member for future help)
- Pooled Trust
- Income Producing Property (with attorney guidance)
- Paying off creditors/families for legally enforceable debt
Your options in protecting the home sale proceeds depends upon a number of issues, which should be addressed with a qualified elder law attorney before you sell your home. These issues include:
- Having a good estate plan in place, maybe with a revocable living trust;
- Having a good durable power of attorney if the elder is incompetent;
- Hiring the right attorney to help protect the assets and appropriately inform Medicaid
Importantly, you cannot gift the homestead property away within 5 years of a Medicaid application, so planning in advance is very important if you want to provide an inheritance for your children. If you want to protect your home for your children's inheritance before you go into the nursing home or assisted living facility, you may want to download a copy of our free guide to protecting your Florida homestead property.
What if one spouse is in the nursing home on Medicaid but there is a spouse at home?
The sale of the home would not effect Medicaid for the spouse in the nursing home with the caveat that the proceeds from the sale of the home should be placed into the community spouse's name. If an attorney assisted the family with a Medicaid application, it would be best to confirm this possible plan with that attorney.
Also, many people ask will Medicaid take the proceeds from the sale?
The answer is no. Medicaid (i.e., the State of Florida) does not take the proceeds if you sell the home during the elder's life, but unless someone acts to protect the proceeds (i.e., spend down) , the Medicaid applicant will lose their Medicaid as the countable assets are now above the $2,000 limit. When the home sales, for instance, the assets should have been legally spent/protected by the end of the month after the sale in order to ensure that Medicaid eligibility has not been disrupted.
Also, the rules are different for a husband and wife under most circumstances.
Finally, can DeLoach, Hofstra and Cavonis P.A. help us protect the proceeds?
Yes. It does not matter where you or your elder is located in Florida. Medicaid is a statewide system and we are glad to work with and help families from all over and out of state. We have helped hundreds of clients in situations just like this and we are glad to help you out now.
People who read this article may want to read the following:
- Can we protect assets with the elder already in the nursing home?
- My loved one just went to the nursing home - what will happen next?